LTC Planning and Medicaid

[chinaco]

We have a split plan for LTC funding. Part LTCi that would cover the front end (for so many years) and part nest egg (to serve as a backstop if the LTCi amount is exceeded).


The ongoing discussions about LTC planning got me wondering... What if our Plan A fails? 30+ years is a long time. What would it mean if (for some unexpected reason) the resources for plan A were not available or were impaired severly in 10 years or 20 years and then an LTC event actually happened. Insurance companies do fail and what would it mean if we took a big hit on our assets. What would that mean to DW and I and specifically to the surviving spouse.

I guess the FIRE planning never stops.

I am reading a book: How to Protect Your Family's Assets from Devastating Nursing Home Costs (Medicaid Secrets) by K. Gabriel Heiser. I am half way through it.

What I found out so far.. those basic rules we read about in articles and even at state medicaid sites (those summaries)... as expected, they present only the most basic information.

I recommend reading the book. You can probably get it at your library. Medicaid may be a safety net... but it can also be a net that can be a bit of a trap... especially for the surviving spouse! The rules are very convoluted. I cannot adequately describe it so I will not even try.

Added: My recommendation about the book is for educational purposes. I am not recommending that anyone follow it. Even the author cautions against it. He clearly states that people should seek help and guidance from qualified professionals.

It reinforced the need to have a real plan in place. We do have a plan for funding... but I need to review it and make sure there are no holes in it (i.e., assumptions). I intend to do a little more study on it. Hopefully I can be objective (and critical) about our current plan.

No plan is going to be perfect and that is where Medicaid LTC can help.

The thing that bothers me about the Medicaid rules. In an effort to keep people from transferring assets to their kid and then getting Medicaid to pay for LTC... They leave the surviving spouse in pretty poor shape (IMO). The spouse (if done properly) can keep the home (assuming it does not exceed the cap). But other than that they are not left with much income or assets. Plus there are so many ways to mess up and wind up penalized or having to go to a hearing to deal with it or even court... It is really a convoluted mess.

[FinanceDude]

You DO NOT want to be on Medicaid if you can help it. My FIL was on Medicaid the last 20 years of his life, it was ugly on some many levels.........

[youbet]

Quote:

Originally Posted by chinaco It is really a convoluted mess.

That's because we citizens tend towards being con artists wanting to have our cake and eat it too. "Gee, even though I have a million+ buck FIRE portfolio, I want Medicaid to pay for my LTC so I can leave my money to my kids, favorite charity, alma mater, grandchildren, cherished neice or nephew, etc.

I do agree with you that one needs to understand the rules in order to plan. But I wonder if this book addresses the significantly different rules from state to state or does it just refer you to go look up the rules in your state?

[REWahoo]

Quote:

Originally Posted by youbet "Gee, even though I have a million+ buck FIRE portfolio, I want Medicaid taxpayers to pay for my LTC so I can leave my money to my kids, favorite charity, alma mater, grandchildren, cherished neice or nephew, etc.

FIFY

[travelover]

Quote:

Originally Posted by youbet ....... I want Medicaid to pay for my LTC so I can leave my money to my kids, favorite charity, alma mater, grandchildren, cherished niece or nephew, etc...........

Agree, but I don't think most of us would want to leave our spouses nearly broke as a result of burning up shared savings on our own care. I think this aspect varies widely by state.

[chinaco]

Quote:

Originally Posted by youbet ... I do agree with you that one needs to understand the rules in order to plan. But I wonder if this book addresses the significantly different rules from state to state or does it just refer you to go look up the rules in your state?

It does not do it thoroughly... it makes an attempt to give key difference and examples. But there are so many issues... that would be impossible. Some of it requires knowledge of case law.

The author comments that the book is educational and not a DIY reference. But most of the ideas (surprise) requires an experienced attorney because of all of the legal issues. In some cases just to work through it to get what would be normally due (depending on the situation) or to avoid mistakes.

My interpretation... if one uses Medicaid two approaches:

1. Throw yourself (and your spouse) on the mercy of the state medicaid personnel (and some social worker that might provide some guidance.. obudsman).
2. Hire an attorney. Maybe go to court. The use of the attorney would need to be (or would best be applied) in a proactive way... before it happens.

Much of it was about trying to maximize what the spouse might be entitled to receive. Some of it was about ending up with some residual amount in the estate that might make it to the kids.

[youbet]

Quote:

Originally Posted by travelover Agree, but I don't think most of us would want to leave our spouses nearly broke as a result of burning up shared savings on our own care. I think this aspect varies widely by state.

Well, I sure don't want to leave either my spouse or myself destitude as a result of the other being in LTC. OTOH, it seems like the bottom line of most of these "protect your assets during LTC" strategy books is to have taxpayers pay for your LTC despite you having the resources to do so yourself. It's a "have your cake and eat it too" outlook.

I do agree with OP that it is wise to understand the Medicaid rules regarding LTC in your state. For example, I have work to do in this area because a long stay in a NH for either one of us might indeed leave the other in a bind. We're OK for the more typical 2 - 3 year stay.

As I've stated in a number of LTC related threads, I'm looking for (and failing to find) a LTCi plan with either a high deductible or a long waiting period that would be inexpensive (because it's so unlikely you'd use it) but would keep the surviving spouse from poverty. For example, a policy with a two year waiting period would work well for us.

Another area of concern is that I sense many folks overlooking is the difference between assisted living and LTC. My cousin got quite a shock when she wanted to put her folks into an assisted living apartment because she felt they really needed someone to check on them daily while she and hubby traveled. Their LTCi said no coverage as they did not have the required impairments. My understanding is that in Illinois, Medicaid does not pay for assisted living either.

[skyvue]

Quote:

Originally Posted by FinanceDude You DO NOT want to be on Medicaid if you can help it. My FIL was on Medicaid the last 20 years of his life, it was ugly on some many levels.........

Can you elaborate a bit on this? Are you saying that due to the quality of care he received in a nursing home? Was the nursing home in a large metro area?

I ask because I grew up and will be retiring in a very rural area. There are basically only two nursing homes in the county. Both accept Medicaid patients and are very nice and well maintained facilities. They are the only options for somebody who needs to be taken care of, so it really makes no difference how much money you have, your going to be in one of those two places.

I am single and will be for the rest of my life so I am not "protecting" my assets for anybody. I can't see why I would need/want LTC. My own assets should provide for a fairly long stay if needed.

[Brat]

Medicaid payments to nursing homes is low. It costs more money to operate a nursing home in an urban area than a rural area (consider land costs, labor costs). If your state has the same reimbursement rate across the state then rural nursing homes can provide more for the money. In my experience a facility in an urban area accepting Medicaid at admission tends to be shabbier. Many nicer facilities will accept Medicaid for residents who have lived in the facility for at least a year, maybe two. Keep in mind that nursing homes do not guarantee this.

The care provided in a nursing home is often impacted more by the leadership (administrator) than any other factor. "Lovely" does not translate into "good care".

[chinaco]

Quote:

Originally Posted by youbet ...OTOH, it seems like the bottom line of most of these "protect your assets during LTC" strategy books is to have taxpayers pay for your LTC despite you having the resources to do so yourself. It's a "have your cake and eat it too" outlook. ....

There are not many other sources of information that provide that level of detail on the general subject.

[skyvue]

If someone has depleted all their assets and needs Medicaid, does the Nursing Home take all your Social Security check and then submit charges to Medicaid for the amount over and above the SSN amount?

[Brat]

I believe the resident can retain some SS for incidentals.

[FinanceDude]

Quote:

Originally Posted by skyvue Can you elaborate a bit on this? Are you saying that due to the quality of care he received in a nursing home? Was the nursing home in a large metro area?

Small rural area. However, they made him move 5 times in 20 years, and the level of care was less at each facility. The last facility was just ok, the nurses and staff meant well, but it still looked like an insane asylum in the inside, and was circa 1965 decor.........

[Koolau]

Along with the fear of terror attacks and global financial collapse, LTC is one of the nightmare scenarios that can never be fully planned for. We have an LTCi policy for both of us. It is expensive, but reasonably complete (I think). The premiums have risen, but replacement policies with similar coverage cost much more, so we think maybe we're in the "sweet spot" on cost (who knows?) We also have assets. Still, I can imagine scenarios where we would end up on Medicaid.

I'm of two minds on the concept of "cake" when it comes to Medicaid. While I agree that it's "wrong" for the gummint (us) to pay for someone's care so that they can pass large estates to the next generation, I think it is equally wrong to force folks into abject poverty to qualify for medicaid. Any program this large (mandated by the Feds and administered by states) will be a nightmare maze of rules and bandaids to rules (due to previous abuse). Any "help" available to users will be provided by someone paid by the "system" or else paid at (what?) $250/hr for an attorney.

As usual, the very poor and the very rich (whatever that is) seem to seamlessly glide through without much drama. Those of us with "plans" (covered by assets and/or insurance) could end up almost literally worse than dead through no fault of our own. I don't have a solution, but it does point out at least some of the pitfalls of large health-care (one size fits all) programs. Obviously, there are some advantages to these systems. But, navigating the systems (especially at advanced ages and perhaps at time of infirmity) seems very cruel - especially when the idea was to help.

I guess my hope (prayer?) is to "break even" like the Gambler. YMMV

[heirloom]

"Gee, even though I have a million+ buck FIRE portfolio, I want Medicaid to pay for my LTC so I can leave my money to my kids, favorite charity, alma mater, grandchildren, cherished neice or nephew, etc.


Why not?? If there weren't so many young people out there collecting SSI and medicaid who really could work, I would feel differently.

But, I worked all my life and paid taxes into the system. So, I feel I have just as much as a right to medicaid as the ones who never worked do.

[chinaco]

Quote:

Originally Posted by heirloom "Gee, even though I have a million+ buck FIRE portfolio, I want Medicaid to pay for my LTC so I can leave my money to my kids, favorite charity, alma mater, grandchildren, cherished neice or nephew, etc. ...

Here... I fixed that for you.

[dgoldenz]

NY has a Partnership policy that exempts 100% of ALL assets from Medicaid spend-down. Someone with $10M in the bank is certainly the one that needs Medicaid the most!

[youbet]

dgoldenz....

You're in the business. Who offers a LTC policy that has a 2 - 3 year waiting period designed to cover catastrophic situations where the folks can self-insure for that long but need help for a long (greater than 3 years) NH stay? And would this type of policy be inexpensive because the odds of using it are small? If no one is offering this type of policy, why do you think that is?

[meierlde]

It seems to me (never been married) that getting a divorce, splitting everything 50 50 and shacking up makes sense to solve the spouse problem. Since common law marriage is no longer on the books, it seems that for older folks shacking up makes a lot of sense.
Then one person can't leave the other in penury due to long term illness.

[dgoldenz]

Quote:

Originally Posted by youbet dgoldenz.... You're in the business. Who offers a LTC policy that has a 2 - 3 year waiting period designed to cover catastrophic situations where the folks can self-insure for that long but need help for a long (greater than 3 years) NH stay? And would this type of policy be inexpensive because the odds of using it are small? If no one is offering this type of policy, why do you think that is?

Nobody has a policy like that. The longest WP you'll find that I know of is 365 days. Longer waiting periods are not offered because few people would buy them. The difference in price between a 1-year and 2-3 year waiting period likely would not be large enough to convince most people to take the longer waiting period. Same reason that most people choose a 90-day waiting period for disability insurance....the savings to go to a 180, 365, or 720-day waiting period are really not justifiable in most cases.

Outside the box thinking - why not just buy a policy with a lower monthly benefit and shorter benefit period? That would allow you to use some of the benefits up front at a reduced cost versus a comprehensive "cover everything" policy and then self-insure the back end of an extended claim, while still keeping your premiums at a very reasonable level. Instead of self-insuring the full first 2-3 years, you would set aside the money for ~50% of a nursing home claim because the insurance wouldn't pay for all of it.For example, why not consider something like a $2250/month or $3000/month benefit with a 2-3 year benefit max instead of the $4500/mo or $6k/mo that most people would buy?

There are two ways that most people buy LTC policies - short and fat benefit periods (ex: $7500/mo for 4 years shared) or tall and thin benefit periods (ex: $3k/mo for 12 years shared). It sounds like a "tall and thin" benefit would suit your needs pretty well.